REGULATORY: Government Relations: Alternative Energy Initiatives Continue at Department of Defense By Michael A. Andrews, Thomas J. Spulak and Allison F. Kassir

by King & Spalding

While renewable energy tax issues remain in flux amidst negotiations between Congress and the Administration, work on other federal renewable initiatives continues. On December 20 and 21, the House and Senate, respectively, approved the conference report for the Fiscal Year (FY) 2013 defense authorization bill allowing, with some limitations, the continuation of work by the Department of Defense (DOD) on biofuel projects.

DOD is the largest government user of energy, spending over $17 billion on fuel costs in FY 2011. Although DOD’s investments in alternative energy have been comparatively small, the Department has sought to grow this capacity, for both operations and on installations. DOD uses several key criteria in pursuing alternative fuels, they must: (1) be “drop-in” and require no modification to existing engines; (2) be cost-competitive with conventional petroleum fuels; (3) be derived from a non-food crop feedstock; and (4) have lifecycle greenhouse gas emissions less than or equal to conventional petroleum fuels. Formal responsibility for DOD’s alternative fuels initiatives and policy is vested within the Office of the Assistant Secretary of Defense for Operational Energy Plans and Programs.

Last April, the Defense Department announced it had set a goal to deploy three gigawatts of renewable energy – including solar, wind, biomass, or geothermal – on Army, Navy, and Air Force installations by 2025. In addition, each of the three services is pursuing a different approach to increase its use of alternative fuels. The Army aims broadly to increase use of renewable energy and through the U.S. Army and Corps of Engineers (USACE), issued an order contract for $7 billion in total capacity to procure reliable, locally-generated, renewable, and alternative energy through power purchase agreements. The Air Force aims to test and certify all aircraft and systems on a 50-50 alternative fuel blend by the end of 2012 and acquire 50 percent of its domestic aviation fuel as an alternative fuel blend by 2016. The Navy aims to deploy a “Great Green Fleet” strike group of ships and aircraft running entirely on alternative fuel blends by 2016 and meet 50 percent of the Navy's total energy consumption from alternative sources by 2020. The Navy also partnered with the Departments of Energy and Agriculture to pledge $510 million to “assist the development and support of a sustainable commercial biofuels industry” by partnering with industry to construct domestic biofuel plants and refineries.

Several Republicans in Congress have objected to DOD’s pursuit of alternative fuel sources. Incoming Senate Armed Services Committee (SASC) Ranking Member James Inhofe (R-OK) has focused on “stopping President Obama from forcing the Department of Defense to spend enormous amounts of scarce resources on pointless global warming efforts, all while he is gutting our military, drastically reducing DoD's budget, and cutting core programs that are vital to our troops' safety.” Although Senator Inhofe and current SASC Ranking Member John McCain (R-AZ) were initially successful at adding amendments to restrict DOD’s abilities to purchase alternative fuels or invest in biofuel production capacity, the amendments were struck during consideration of the defense bill on the Senate floor in late November. Ultimately, the conference report on the defense bill allowed continued alternative fuel initiatives funding but conditioned the release of about $70 million in funding for the construction of a biofuel refinery until the Departments of Energy and Agriculture contributed equal funding.

While the White House threatened to veto both the House and Senate versions of the defense authorization bill, SASC Chairman Carl Levin (D-MI) is confident that the President would sign the House-Senate conference report. In the next Congress, we expect a continued DOD press on alternative energy initiatives, which will continue to generate opposition and ongoing oversight by Members of Congress who view such efforts as contrary to the mission of the Department.


 Michael A. Andrews
 Washington, D.C.
 +1 202 626 5609

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 Thomas J. Spulak
 Washington, D.C.
 +1 202 661 7948
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 Allison F. Kassir
 Washington, D.C.
 +1 202 626 5600

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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